After moving within 65 points of its all time high earlier in the week, the FTSE 100 came down to earth with a bang.

It fell 53 points on Thursday and another 109.54 points on Friday - its biggest one day fall since June - to finish at 6663.74. Over the week it has lost 165 points or 2.4%, its biggest weekly fall since the week ending 21 June.

Earlier optimism about the global economy was dented by poor Chinese and US manufacturing surveys on Thursday, and a day later investors were rattled by a dramatic drop in the Argentinian currency, prompting worries about Latin America and other emerging markets. The currency falls came as Argentina's cental bank abandoned its policy of supporting the peso by intervening in foreign exchange markets, although it later regained some ground.

The worries about emerging markets hit companies which are strongly represented in the area. Aberdeen Asset Management wasthe biggest faller in the leading index, down 24.1p to 397.3p while SABMiller lost 89p to £28.89.

Diageo dropped 26p to 1946.5p ahead of a trading update next week, amid speculation it could be on the acquisition trail.

Japan's Suntory recently announced a deal to buy bourbon maker Jim Beam, and there had been some suggestions Diageo may look at breaking up the agreement with a bid of its own. But Elaine Coverley, head of equity research at Brewin Dolphin wealth management, said Diageo could also look at Brown Forman, the owner of Jack Daniels.

Mining shares came under pressure again, in the wake of the Chinese data and a disappointing update earlier in the weak from BHP Billiton, down 33p at 1791.5p. Rio Tinto fell 74p to £31.43, while Anglo American lost 40.5p to £13.40 as it admitted it was losing around £5.4m a day due to strikes at its platinum operations which began on Thursday.

Elsewhere Royal Mail was down 15.5p at 572.5p after it reported a 2% rise in sales for the nine months to the end of December, a performance some analysts said was slightly disappointing.

Lloyds Banking Group lost 1.67p to 81.36p on worries about the outlook for the bank and the prospect of the government selling its remaining shares this year, with analyst Ian Gordon at Investec moving his recommendation from buy to hold.

Capita fell 11p to £10.26 a report that regulators could make the outsourcing group pay £100m to investors in a fund it operated that collapsed, adding 4p to £10.41.

But mid-cap rival Serco added 6.5p to 509p as JP Morgan Cazenove raised its target price on the outsourcing group from 523p to 575p, saying:

Serco remains our top pick for 2014 and we believe that the shares could rise when, as we expect, later this month the UK government's Independent Commission lifts the current ban on Serco winning UK public sector contracts. The lifting of the ban could lead to earnings upside if Serco starts winning contracts again and we contrast the 1% organic revenue growth decline forecast for 2014 with the 9% growth in the first half of 2013 achieved before the ban. We also find the valuation appealing with Serco trading on a 2014 PE of 13.1 times, a 19% discount to Capita on 16.1 times.

Cairn Energy closed 14.6p lower at 247.5p after it said it had been contacted by Indian authorities to discuss income tax assessments relating to 2007. Cairn said it was co-operating to provide the necessary information and would update the market in due course. It has been instructed to hold its shares in Cairn India. Meanwhile Morgan Stanley cut its target price from 375p to 350p.

Aim-listed biotech group Akers Biosciences fell 75p to 397.5p as its shares returned from suspension following news it had successfully joined Nasdaq. The company raised $17m with a listing priced at $5.50 or 333p a share, and the funds will be used to help pay for clinical trials for its lung cancer test. The company has developed a breath based blow-tube which it believes can detect the presence of a tumour in the lung even at its earliest stages.

Finally Optimal Payments fell 30p to 370p as IIU Nominees, a company controlled by Irish entrepreneur Dermot Desmond, and Aurum Nominees raised more than £160m by selling more than 44m shares in the online payments business at 365p via a placing run by Canaccord Genuity.